Closed deals because of the corona pandemic have brought the world’s largest sporting goods manufacturer Nike deep into the red.
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In the past business quarter (until the end of May), the bottom line was a loss of $ 790 million (€ 704 million), as the adidas rival announced on Thursday after the US market closed. Nike had earned $ 989 million last year.
Revenue plummeted 38 percent to $ 6.3 billion, primarily due to the temporary pandemic closure of numerous stores worldwide. The digital business with online sales increased by 75 percent, but this was not enough to compensate for the loss in paralyzed retail.
The quarterly figures were significantly worse than expected by analysts. Wall Street sales were expected to be around $ 7.4 billion and in the black. Investors reacted accordingly to the results, and the share posted significant price losses after the exchange.
According to the company, the burdens caused by the corona pandemic have now abated considerably. Around 90 percent of the Nike stores around the world are now open again. The group is now betting that the strong momentum in online sales will continue, while the branch business will pick up speed again with the end of the lockdown measures.
Now is the time to play Nike’s particular strengths and resources, said CEO John Donahoe. “We are uniquely positioned to achieve growth.” However, the corona crisis thoroughly spoiled the year for the otherwise very successful US company. Throughout the past fiscal year, revenue fell four percent to $ 37.4 billion. Net income even decreased 37 percent to $ 2.5 billion.
Goldman Sachs raises price target
Goldman Sachs raised the price target for Nike from $ 96 to $ 110, keeping the stock on the Conviction Buy List. The quarterly result of the sporting goods manufacturer was determined by unexpectedly good sales trends, wrote analyst Alexandra Walvis in a study available on Friday. The accelerated digitalization be welcomed.
Nike stock loses – adidas paper also under pressure
An unexpected quarterly loss by the US sporting goods manufacturer, according to traders, ultimately sent Nike shares in US trade down 7.62 percent to $ 93.67 on Friday. Early losses also rubbed off on rival adidas stocks. The shares of the DAX 30 group fell on XETRA by 2.10 percent to EUR 233.00.
After all, it was the first loss of Nike in more than two years, it said on the market. The virus pandemic is affecting both the sports goods and luxury goods groups. Many shops had to be closed due to the shutdown of the economy and the restrictions on social life.
By the beginning of June, the adidas shares had recovered quite well from their Corona crisis low to EUR 265.60, but recently made little progress. Concern about a second wave of coronavirus is also hampering share price development.
BEAVERTON (dpa-AFX) / (dpa-AFX broker)
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